The project studies rainfall patterns in India in the last decade and how the economy has grown.

1. THE INDIAN ECONOMY Impact of the Rainfall

2. AN INTRODUCTION
Rainfall
India has a tropical monsoon climate and rainfall is an important element in the Indian
economy. The monsoons affect most parts of India where some regions receive a large
amount of rainfall whereas the others receive almost none.
Almost every year, some part of the country experiences a drought or a flood. Some
parts of the country are more prone to such events than others in the country.
Usually the Indian monsoon lasts between the end of May and the first week of October.
The South-West Monsoon Rains which occurs between June and September every year is
responsible for nearly 76 percent of the annual precipitation in the country.
The rainfall season between the months of October and December is known as the North-
East monsoon season and this affects south Peninsular India.

3. Economy
 The Indian Economy is the second fastest growing large economy in the world after China. The
rainfall in India is one the largest drivers of it’s economy. Most sectors of the economy are
directly or indirectly impacted by rainfall in the country. This has a strong correlation to
growth in the GDP.
 Economies like the USA and the UK are strongly driven by domestic consumption, and the
exports of goods and services. GDP growth in such economies are hence driven primarily by
domestic and international market forces. On the other hand economies like China are largely
investment led, wherein government investment and policies (including currency control) play a
big role in GDP growth besides domestic consumption and exports.
 The Indian economy occupies a unique space in the global scenario, which has became even
more apparent in the past decade. While it has a population in excess of 1 Billion, it’s per
capita consumption levels across goods and services ranks very low. Adding to this, the past
decade has shown very little government led initiatives related to open market reforms or
investment, which is necessary to boost GDP growth.

4.  Despite these factors the Indian economy has grown at an average of 7.69% over
the last decade (from $721.6 Billion to $2.049 Trillion) which is a huge growth for a
country with a low level of consumption and poor governance.
 Hence we realise that there are other drivers to the Indian economy, one which is
unaffected by governance or it’s lack of it – The Rainfall.
In this study I am going to look at the last decade (2004-2014) and show how annual
rainfall has played a significant role in India’s average GDP growth of 7.69% during
the said period. The impact of the rainfall on two of the largest sectors – Agriculture
and Power – will also be looked at in detail in this study.

5. RAINFALL IN INDIA
The monsoon season plays a crucial role in India. Since India is primarily an agricultural country,
a good monsoon season is necessary for the farmers as it is the irrigation for the crops they grow.
The rainfall in India is very erratic and unpredictable. Some years a region of the country will
receive a large amount of rainfall and in other years receive a lot less.
The rainfall in India is not evenly distributed throughout the entire subcontinent.
• The west coast, especially the western Ghats along with the Sub-Himalayan areas in North East India and
Meghalaya Hills have the highest amount of rainfall. (More than 200cm of rain)
• The Southern parts of Gujarat, South East India, North Eastern Peninsular India and some of Eastern Central India
receive a moderate amount of rainfall. (About 100-200cm of rain)
• The upper Ganga Valley, Northern states and the Southern Plateau of states like Karnataka, Tamil Nadu, and
Andhra Pradesh receive a smaller amount of rainfall. (About 50-100cm of rain)
• The Northern part of Kashmir and the Deccan Plateau receive very scanty rainfall. (Less than 50cm of rain)

6. Thus we see how some parts
of India especially the West
coast and North East India
receive lots of rain whereas
Central India receives
comparatively lesser rainfall.

7. It also should be noted that the
change in rainfall during the
monsoon season mainly affects two
sectors of the Indian economy,
agricultural sector and the power
generation sector.
The percentage of rainfall India
actually receives every year is
depicted by this graph in
comparison to the predicted
rainfall for that year. The
average rainfall the country gets
every year has remained 90 –
100% of the normal long term
average.

8. RAINFALL AND AGRICULTURE
India has a huge population of over 1.26 billion people. About 70% of these
people are involved in the agricultural sector of the country. Their livelihood
indirectly depends upon the incidence of the monsoon season every year.
When India receives below 90% of a long period average rainfall it is termed as
a deficient rainfall and if the country receives more than 110% of the long period
average then it is termed as excess monsoon.
60% of all the farms present in India depend upon the rainfall for irrigation for
their crops. The remaining farms with advanced technology and artificial methods
of irrigation still require a good rainfall so that water reserves may be replenished.

9.  The El Nino effect is another
phenomenon which affects India and
the rest of the world from time to time.
The El Nino effects results in the
changing of temperatures of the
Pacific Ocean which leads to changes
in wind patterns which causes floods
and droughts. By extension the effect
also leads to lower production of
summer food crops like rice, cotton and
oilseeds.
 The La Nina effect is the opposite of
the El Nino effect. It leads to the
increase of rainfall in India and hence
benefits the summer crops.
Year Effect Impact
% of Normal
Rainfall*
2004 El Nino Drought 90%
2005 Neutral Normal 101%
2006 Neutral Normal 103%
2007 La Nina Above Normal 110%
2008 La Nina Above Normal 105%
2009 El Nino Severe Drought 78%
2010 La Nina Normal 100%
2011 La Nina Normal 105%
2012 El Nino Below Normal 92%
2013 Neutral Above Normal 107%
2014 El Nino Below Normal 88%
*long term average

10. Economic Impact
 In India the production of food grains is extremely important. The production of these
food grains relies on the amount and distribution of rainfall over the country within the
given year. The population of the country however is increasing at a rate much
greater than that of the food grain production, due to which a whole series of
economic problems arise.
 The most important crops affected by changes in the rainfall are:
• Rice
• Soybean
• Sugarcane
• Oilseeds
• Cotton
 A deficient rainfall occurs when the average rainfall of the country is below 90%. A
deficient rainfall has a huge impact on the food grain production of India and would
cause a drop in the overall growth of the agricultural sector.

11.  If a drought were to occur in the country then the food production of the country drops
by approximately 10% of what it was in the previous year. This implies that the
production of Kharif crops (the summer crops) falls. Since the ground becomes drier as
compared to what it is usually is the Rabi crops (the winter crops) is also impacted.
 The agricultural and allied sectors contribute heavily to India’s GDP every year. A large
number of agricultural good are exported from the country every year. The goods
exported are for all sectors of the economy – primary, secondary and tertiary sectors.

12.  A poor monsoon season could result in the inflation of food prices. In the last couple of
years, there has been a growth of the Indian economy but this has been coupled along
with a high rate of food inflation.
 A high rate of food inflation leads to the reduction in the purchasing power of the of the
poor people and also leads to lower consumption levels.
 If the monsoons boost farm output and lead to greater production of food grains and
other agricultural goods, it would lead to an rise in the domestic demand of the country.
This is because there would be an increase in the incomes of the farmers growing /
producing these goods.
 If the farms are able to produce a large output, then it would help the government
control food prices and take the necessary steps to cut the ever increasing fiscal deficit.
 The monsoon season also impacts the demand for gold within the country (India consumes
the most amount of the metal in the world). When farming incomes get a boost the rural
demand for gold rises a lot. Rural India demands a lot of gold annually (nearly 70% of
the total consumption) as it is a very popular investment in the country where there aren’t
other financial services available.

13.  India is a self sufficient country when it comes to major food grains such as rice and
wheat, but due to a crisis sometimes the country is forced to import these food grains. An
instance of this can be seen in 2009 when a severe drought which hit most of the
country, forced us to import basic commodities like sugar.
Year
Production of Food
Grains
Public Distribution Net Exports
2002 174.8 18.2 6.7
2003 213.2 23.2 5.5
2004 198.4 28.3 6.5
2005 208.6 31.0 6.0
2006 217.3 31.8 2.3
2007 230.8 32.8 4.7
2008 234.5 34.7 9.7
2009 218.1 41.3 4.1
2010 244.5 43.7 2.2
2011 259.3 47.9 2.9
(All data is in million tonnes of food grains.)

14. RAINFALL AND POWER GENERATION
The Indian Government is always investing in and looking for more clean and
renewable technologies to meet the rising demand for electricity in the country. Today
hydropower, wind power and other such renewable sources of energy comprise a third
of the total installed capacity.
Currently wind and hydroelectricity contribute about 15% to the total power
generation in the country, however we are only producing one-fifth of what we could
potentially produce. If we are able to better these sources and make them more
efficient we would be able to cut down on other sources which are harming our
environment.
The monsoon rains replenish the underground water supply and raise the underground
water levels. This leads to better irrigation for the farmers and also more production
of hydroelectricity.

15. Here we can see the total amount of energy
produced by renewable sources of energy and
hydroelectricity has increased over time.
Year
Installed Wind Power
Capacity (MW)
2008 10920
2009 13050
2010 16080
2011 18420
2012 20150
2013 21260
2014 23450
Plan Period
Addition to Hydro
Power during the Plan
(MW)
Total Hydro Power at
the end of the Plan
(MW)
10th plan
(2002-03 to 2006-07)
9500 36000
11th plan
(2007-08 to 2011-12)
18000 54000
12th plan
(2012-13 to 2016-17)
30000 84000
13th plan
(2017-18 to 2021-22)
31000* 115000*
Increase in Hydro Power in India
*assumed increase and output
Increase in Wind Power in India

16. Most of the power produced in India is
still obtained via thermal power and this
has to be reduced. Generation of
electricity from thermal sources (coal, oil
and natural gas) is harmful to the
environment and can easily be replaced
by other sources especially wind and
hydroelectricity. India has an ample
amount of wind and water sources for
these technologies coming in especially
during the monsoon, so all we must do is
harness them.

17. Economic Impact
 Hydro and wind power in India still have to reach their optimal potential. They both are
renewable sources of energy that the government has recognised as the most
economical in the long run.
 Greater rain in the country means that more and stronger winds are coming to the
country carrying moisture along with them. This boosts wind and hydro energy plants
and would allow us to cut down on power generated by thermal sources especially using
coal.
Demand and supply of electricity in India.

18.  In India there is a 12% shortage of power during the peak hours of the day, between
5 and 11 pm. The rains and the strong winds that accompany the rains are thus
important for power generation across the country as a power shortage of any kind
lowers the productivity of the country.
 Using wind and hydro energy means that more jobs shall be created thus cutting down
on unemployment.
 During the summer months India heats up a lot and people look forward to the rains to
cool down the summer heat. Low rainfall would mean this does not occur and people
would require more energy to make use of air-conditioning systems. Thus more
electricity would be needed making it more expensive as the country hasn’t maximised
its production as yet.
 Diesel is demanded by the population which is used to run motors to draw water from
wells whenever there is less rainfall. Diesel is one of the major oil product that India
demands. Better power production facilities will help cut down on this expenditure.

19.  Droughts increase the rural distress, this pressurises the government to increase the
expenditures on subsidies and welfare schemes in rural areas, which reduces the money
they can spend on other sectors which provide the bulk of its support.
 On account of a drought in the country, it would mean that there is less drinking water in
the country so the government will then cut off electric supply to power generators and
farms and supply water to households.
 For the Indian economy to grow at on a sustained basis of 9% annually the government
must increase the power generation capacity by 60 GW every 5 years. This requires an
investment of approximately $100 billion every 5 year period.

20. EFFECT ON INDIAN ECONOMY
In the last decade the country has received an average rainfall of 98% of the normal long term
rainfall that the country receives. During this same time period there had been an average growth
of 7.69%
The economy has gone from a little over $700 billion to become a $2 trillion economy despite the
fact that it hasn’t been backed by significant increase in consumption and has even been saddled
with a government which could not push through much needed reforms. Also, the government has
been plagued with multiple instances of scams, corruption, and vagaries of coalition politics, which
is sufficient to wreck havoc in any country.
By looking at the agricultural and power sectors we see clearly see that good rainfall over the
decade has contributed significantly in driving the Indian economy towards becoming the second
fastest growing large economy in the world.
We will now look at 3 indicators – the inflation, the growth of industrial production (IIP) and the
growth of the GDP to show how closely related the Indian economy and the rainfall are.

21. Year Inflation (%)
2004 3.78
2005 5.57
2006 6.53
2007 5.51
2008 9.70
2009 14.97
2010 9.47
2011 6.49
2012 11.17
2013 9.13
2014 5.86
Inflation is the rise of prices in the economy. There
are 3 main types of inflation in any economy:
• Creeping Inflation: It is the mild inflation in the
country and is less than or equal to 3%
• Walking Inflation: When the inflation in the
country is between 3% and 10%
• Galloping Inflation: It is a strong/pernicious
inflation in country and is more than 10%
In India we see that the average inflation over the
last decade is 8.02% which is quite high.

22. Year IIP* Growth in IIP (%)
2004 100 -
2005 108.6 8.6
2006 122.6 12.9
2007 141.7 15.5
2008 145.2 2.5
2009 152.9 5.3
2010 165.5 8.2
2011 170.3 2.9
2012 172.2 1.1
2013 172.0 -0.1
2014 176.9 2.8
Index of Industrial Production (IIP) is a short
term indicator of industrial growth that
measures the quantum of changes in the
industrial production in an economy and
captures the general level of industrial
activity in the country. It is a composite
indicator expressed in terms of an index
number which measures the short term
changes in the volume of production of a
basket of industrial products during a given
period of time.
*with respect to base year 2004

23. Year
Nominal GDP (in USD
Billions)
GDP Growth (%)
2004 721.6 7.85
2005 834.2 9.29
2006 949.1 9.26
2007 1238.7 9.80
2008 1224.1 3.89
2009 1365.4 8.48
2010 1708.5 10.26
2011 1843.0 6.64
2012 1859.0 5.08
2013 1875.8 6.90
2014 2049.5 7.17
Increase in India’s GDP in the last decade

24.  If we were to correlate the numbers of rainfall and those for inflation, IIP growth and GDP
growth, we realise that while the rainfall does have a big impact on the economy and its
growth, it is not the only factor has contributed to the impressive growth rate India has
demonstrated over the past decade. The Indian Macros is significantly impacted by one other
‘Liquid’ factor.
 Nearly one-third of India’s total imports every year is crude oil. When the average price of a
barrel of crude (WTI Nymex Brent Crude Oil in USD) is in the range $85-90, the Indian
government spends almost $110 billion on oil imports during a year. That’s a lot of money to
be spent on one commodity, especially when it is paid for in hard currencies like the USD.
 We see that in India, good rainfall and average crude oil prices below $80 during the
decade under study have been akin to a tailwind for the economy, despite the headwinds of
poor governance and low per capita consumption.
 A good rainfall in India helps cool the usually high inflation which not only benefits the farm
sector and sectors related to it, but also ensures good overall GDP growth.
 Similarly, if crude oil prices rise beyond $90 a barrel, even good rainfall is not enough to
keep inflation in check. Rise in oil prices tends to distort India’s trade deficit (on account of
higher imports) and generally heralds a period of lower industrial production (IIP).

25.  Over the last decade there has been a high rate of inflation - average inflation was
8.02% however the inflation has varied across the years.
 We also see that inflation led rise in prices have also contributed in overall GDP
growth. While high levels of inflation is clearly undesirable for long term sustained
growth of a economy, during the decade gone by it has played a significant role in
India’s overall GDP growth.
 The growth of the industrial production in the country has been at an average of
5.87% in the previous decade.

26. TWO INTERESTING PERIODS DURING THE PAST DECADE
• The country received a good rainfall – average of
105%.
• During this period the oil prices were also quite low –
average of $65.01 per barrel.
• Therefore throughout these years due to the combined
effect of a healthy rainfall and low oil prices we see
that the Indian economy benefited greatly.
• The average inflation (5.8%) was lot lower than the
decade average while the industrial production was
boosted to a great extent. In 3 years the production
had grown at an average of 12.33% while the
economy had grown 9.45% - a rate well above the
decade average.
• This clearly shows how low oil prices and good
rainfall do good for the Indian economy.
• The country did receive a good rainfall during this
time – average of 101%.
• During this period however the oil prices were high –
each barrel of oil cost $95.64 on average.
• Throughout these three years due to the combined
effect of a healthy rainfall and high oil prices we see
that the Indian economy suffered a lot.
• The average inflation (8.93%) was higher than the
decade average while the industrial production fell by
a huge amount. In 3 years the production grew at an
average of 1.3% while the economy had grown
6.21% - both had grown at a rate well below the
decade average.
• This shows that high oil prices do have a large impact
on the economy and even if paired with good rainfall,
the economy still suffers.
2003-2005 2011-2013

27. Year % of Rainfall
WTI Nymex
Brent Crude
Oil (USD)
Nominal GDP
(in USD
Billions)
Inflation (%)
Growth in IIP
(%)
GDP Growth
(%)
2004 90% 31.80 721.6 3.78 - 7.85
2005 101% 56.64 834.2 5.57 8.6 9.29
2006 103% 66.05 949.1 6.53 12.9 9.26
2007 110% 72.34 1238.7 5.51 15.5 9.8
2008 105% 99.67 1224.1 9.7 2.5 3.89
2009 78% 61.95 1365.4 14.97 5.3 8.48
2010 100% 79.48 1708.5 9.47 8.2 10.26
2011 105% 94.88 1843 6.49 2.9 6.64
2012 92% 94.05 1859 11.17 1.1 5.08
2013 107% 97.98 1875.8 9.13 -0.1 6.9
2014 88% 93.26 2049.5 5.86 2.8 7.17
Consolidated table of all indicators

28. 0
20
40
60
80
100
120
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
%ofRain/$ofOil
Year
Rainfall (%) and Oil Prices
Rainfall Oil Prices
0
2
4
6
8
10
12
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
GDPGrowth%
Years
GDP Growth %
The graphs show the variation in
rainfall and oil prices in India, and the
change in the growth of the GDP over
the years.

29. -2
0
2
4
6
8
10
12
14
16
18
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
%ofIndicators
Year
Comparison of increase in Indicators
GDP Growth (%) Growth in IIP (%) Inflation (%)

30. CONCLUSION
Thus we see that India is a country which is strongly dependant on good annual
rainfall. The rainfall in India has a huge impact on two of the biggest sectors of the
economy – agriculture and power sector.
The government of India has not been a strong one over the past decade. Coalition,
scams and corruption rule the government and hence it has not been able to do its
job correctly i.e. run the country well. There have been no strong policies / initiatives
implemented by the government. The consumption of the country has also remained
relatively low when compared to developed countries like USA and UK or
developing economies like China, Brazil etc.
Good rainfall and relatively softer crude oil prices have greatly assisted India to
emerge as the second fastest growing large economy in the world.

31.  If this current incumbent government in India, which has a strong majority in the lower
house of parliament, is finally able to implement strong policy measures to drive
investment as well as control inflation in the country, good rainfall and soft crude oil
prices over the next decade can easily propel India into becoming the fastest growing
large economy in the world.
India can soon overtake China and become the world’s fastest growing economy.
THE END